Financial forecast for L.A. is grim

Los Angeles faces a grim 2008 with no indication the local economy will pick up until late next year, a group of economists told Mayor Antonio Villaraigosa and political and civic business leaders Tuesday.

While the local economy is not about to go into a recession, the mayor was advised that it will be some time before revenue returns to previous growth levels.

"What this shows is that we are going to have to make some tough decisions," Villaraigosa said during the session in the Lexus Club of Staples Center.

The annual briefing, normally held as a private session for the mayor and his top staffers, was opened to include business and political leaders to try to rally support for whatever plan Villaraigosa develops and releases as his 2008-09 spending plan in mid-April.

"I wanted to bring some transparency and openness this year so you would know what we are dealing with," Villaraigosa said.

Revenue to the city has been flat or declining in a number of sectors, particularly sales tax.

The bright spots for the city are the entertainment industry and tourism, both of which continue to be major sources of employment and revenue for the city.

But most of the local economic problems are tied to the slump and the problems in the housing market, the economists said.

The worst problems are in pockets of the city - dotted heavily in the San Fernando Valley - where people refinanced their homes or had adjustable-rate mortgages that have soared and forced many to walk away from their homes, said Jack Nickelsburg of UCLA.

Nickelsburg said he also is concerned about the types of jobs being created in the economy - with fewer construction jobs and more service jobs.

Jack Kyser of the Los Angeles County Economic Development Corp. said part of the city's problems were self-inflicted.

"It still takes too long to get a permit, too long to open a business, too long to get the bureaucracy to respond when people want to do business in Los Angeles," Kyser said.